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AP Microeconomics
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Subjects
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economics
,
ap
Instructions:
Answer 50 questions in 15 minutes.
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study here
.
Match each statement with the correct term.
Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.
This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Two goods are consumer substitutes if they provide essentially the same utility to consumers
Marginal Cost (MC)
Marginal Benefit (MB)
Substitute Goods
Economic Growth
2. The total quantity - or total output of a good produced at each quantity of labor employed
Excess Capacity
Accounting Profit
Incidence of Tax
Total Product of Labor (TPL)
3. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good
Excess Capacity
Spillover benefits
Price inelastic demand
Average Total Cost (ATC)
4. The imbalance between limited productive resources and unlimited human wants
Monopolistic competition long-run equilibrium
Negative externality
Normal Profit
Scarcity
5. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand
Perfectly inelastic
Natural Monopoly
Income Elasticity
Profit Maximizing Resource Employment
6. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good
Law of Increasing Costs
Marginal Product of Labor (MPL)
Long Run
Necessity
7. Ed = 1
Scarcity
Marginal Analysis
Average Variable Cost (AVC)
Unit elastic demand
8. Models where firms agree to mutually improve their situation
Marginal Product of Labor (MPL)
Constrained Utility Maximization
Collusive oligopoly
Monopolistic competition long-run equilibrium
9. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.
Total Fixed Costs (TFC)
Price Elasticity of Supply
Marginal Benefit (MB)
Constant Returns to Scale
10. A firm that has market power in the factor market (a wage-setter)
Constrained Utility Maximization
Determinants of Demand
Monopsonist
Price discrimination
11. Entry of new firms shifts the cost curves for all firms upward
Total Product of Labor (TPL)
Determinants of elasticity
Excess Capacity
Increasing Cost Industry
12. Entry (or exit) of firms does not shift the cost curves of firms in the industry
Excess Capacity
Constant cost industry
Perfectly inelastic
Four-firm concentration ratio
13. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it
Positive externality
Free-Rider Problem
Spillover benefits
Public goods
14. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials
Diseconomies of Scale
Variable inputs
Marginal tax rate
Price discrimination
15. Product demand - productivity - prices of other resources - and complementary resources
Least-Cost Rule
Determinants of Labor Demand
Total Revenue
Free-Rider Problem
16. The additional benefit received from the consumption of the next unit of a good or service
Economic Growth
Marginal Benefit (MB)
Determinants of Demand
Variable inputs
17. When firms focus their resources on production of goods for which they have comparative advantage
Determinants of Supply
Specialization
Positive externality
Total Product of Labor (TPL)
18. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit
Market Economy (Capitalism)
Long Run
Producer surplus
Relative Prices
19. ATC = TC/Q = AFC + AVC
Increasing Cost Industry
Unit elastic demand
Total Fixed Costs (TFC)
Average Total Cost (ATC)
20. Total product divided by labor employed. APL = TPL/L
Perfect competition
Market power
Unit elastic demand
Average Product of Labor (APL)
21. Direct - purchased - out-of-pocket costs paid to resource suppliers provided by the entrepreneur
Explicit costs
Constant cost industry
Constrained Utility Maximization
Free-Rider Problem
22. Entry of new firms shifts the cost curves for all firms downward
Total Revenue
Market power
Resources
Decreasing Cost industry
23. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur
Implicit costs
Constant Returns to Scale
Private goods
Excise Tax
24. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter
Economic Profit
Luxury
Relative Prices
Dead Weight Loss
25. The difference between total revenue and total explicit and implicit costs
Comparative Advantage
Economic Profit
Derived Demand
Explicit costs
26. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received
Normal Profit
Price Elasticity of Supply
Diseconomies of Scale
Constrained Utility Maximization
27. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage
Non-collusive oligopoly
Economic Growth
Price Ceiling
Utility Maximizing Rule
28. The difference between the price received and the marginal cost of producing the good. It is the area above the supply curve and under the price
Normal Profit
Fixed inputs
Unit elastic demand
Producer surplus
29. Demand for a resource like labor is derived from the demand for the goods produced by the resource
Price floor
Oligopoly
Market Economy (Capitalism)
Derived Demand
30. AVC = TVC/Q
Excess Capacity
Average Variable Cost (AVC)
Total Revenue
Break-even Point
31. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand
Total Revenue Test
Income Effect
Private goods
Determinants of Demand
32. Additional costs to society not captured by the market supply curve from the production of a good - result in a price that is too low and a market quantity that is too high. Resources are overallocated to the production of this good
Law of Increasing Costs
Marginal Revenue Product (MRP)
Shortage
Spillover costs
33. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity
Excise Tax
Accounting Profit
Resources
Determinants of elasticity
34. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)
Oligopoly
Income Effect
Price inelastic demand
Explicit costs
35. MUx / Px = MUy/Py or MUx/MUy = Px/Py
Utility Maximizing Rule
Cartel
Excess Capacity
Constant Returns to Scale
36. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply
Economic Profit
Determinants of Supply
Total Product of Labor (TPL)
Market Economy (Capitalism)
37. A good for which higher income decreases demand
Market power
Price Elasticity of Supply
Inferior Goods
Marginal Resource Cost (MRC)
38. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income
Marginal Benefit (MB)
Natural Monopoly
Marginal tax rate
Total Revenue Test
39. The most desirable alternative given up as the result of a decision
Opportunity Cost
Collusive oligopoly
Market Equilibrium
Scarcity
40. Ei = (%dQd good X)/(%d Income)
Income Elasticity
Necessity
Price inelastic demand
Public goods
41. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0
Total variable costs (TVC)
Dead Weight Loss
Perfectly competitive long-run equilibrium
Oligopoly
42. The output where ATC is minimized and economic profit is zero
Break-even Point
Non-collusive oligopoly
Accounting Profit
Long Run
43. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices
Market Economy (Capitalism)
Price floor
Average Product of Labor (APL)
Perfectly competitive long-run equilibrium
44. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good
Monopsonist
Derived Demand
Law of Demand
Short run
45. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability
Price floor
Unit elastic demand
Constant Returns to Scale
Resources
46. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand
Demand for Labor
Monopoly
Law of Diminishing Marginal Utility
Short run
47. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price
Productive Efficiency
Spillover benefits
Marginal Product of Labor (MPL)
Consumer surplus
48. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry
Consumer surplus
Oligopoly
Derived Demand
Decreasing Cost industry
49. The lost net benefit to society caused by a movement away from the competitive market equilibrium
Negative externality
Diseconomies of Scale
Oligopoly
Dead Weight Loss
50. Ed > 1 - meaning consumers are price sensitive
Law of Demand
Price elastic demand
Production function
Excess Capacity
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